To have discs while they drive, buyers of most Australian models pay a massive premium. Yet the cost to the car maker is often next to nothing, reports JOSHUA DOWLING.

Hear, hear! How car makers push profits on CDs

Why, despite record CD sales and plummeting tape sales, don't all new cars have CD players?

Australians bought nearly 50 million CDs last year, outselling pre-recorded cassettes by more than 30 to one, according to the Australian Record Industry Association (ARIA).

But to get a standard CD player on the country's staple six-cylinder models, buyers must spend $38,000 on a Ford Falcon and $40,000 on a Holden Commodore.

Buying a Holden CD player for a Commodore after the car is delivered costs $1,322 - plus installation.

Yet at least half a dozen popular small cars under $20,000 have CD players - and, in that highly competitive budget segment, the number is growing.

The car companies blame cost and customer demand. According to Holden, only 5 per cent of Commodore Executive buyers are prepared to pay the $450 premium for a CD player when ordering the car. Ford says only 7 per cent of Forte and Futura customers tick the CD option box.

The makers concede this is because most cars are bought by company or government fleets.

It is a different story for models which attract a higher percentage of private buyers - for example, about half of all SS Commodores buyers shell out for a "factory" CD player.

The clincher: for a car buyer, the prices of a radio-cassette and a CD player can difffer by up to $1,300. But for a car maker, the difference can be as little as $3 - that's the premium one maker pays to fit a CD rather than a cassette player to its imported small car.

"The extra cost to a manufacturer is anywhere between next-to-nothing and $100," a car company executive told Drive. "But generally, it's between $50 and $60."

"Radio-cassettes and CD players are delivered to car companies by the thousands.

"They come straight off the production line and into a big box. There's no fancy packaging, no extra handling, no marketing costs and no middle man so they end up being very, very cheap."

For another top-selling imported small car, Drive has learned, the CD player costs the maker just $20 more to source than a radio-cassette. A company spokesman said "it was the best $20 we'd spent" on fitting out the car. "The perceived value of a CD player is $300 to $400. We had to negotiate very hard with the supplier for that but it was worth it."

Most car importers install radios after the cars have landed in Australia because it is cheaper. There is no duty on CD or cassette players.

But if a CD or cassette player is fitted to a car when it arrives it is added to the total car cost on which the maker must pay import duty.

Standard fitment of speakers is another area of cost-cutting - some car makers install them overseas because they are so cheap.

According to another car company insider: "One managing director once bragged about paying 80 cents for speakers.

"The car companies spend big money on the head units because the customer can see them but the speakers are usually hidden behind a mesh grille.

"Mostly, when a car has poor sound it's because of the speakers. Good speakers are the first thing to go when you're trying to cut costs."

Sony's Stuart Jackson concedes CD players are becoming cheaper to manufacture, while other experts predict CD players will become standard on more cars within the next 12 months.

Holden told Drive the company has resisted fitting CD players across its range of cars because research showed its buyers prefer to record CDs onto cassettes.

A senior executive for the company said: "We believe our customers would prefer to keep cassettes in their car rather than carry their CDs around and risk them getting damaged or stolen."

However, according to research by consumer electronics specialist Informark, Australian sales of blank cassettes are also on the decline, dropping from 12 million in 1997 to 10 million last year. Further, sales of aftermarket radio-cassette players dropped by 11 per cent last year - and CD players increased by 34 per cent.

Meanwhile, audio company boffins are making MiniDisc players more affordable. Some experts say the recordable, scaled-down discs are the next major trend, while others say the format will be leap-frogged by the widespread availability of full-size CD recorders.